The Biggest Ponzi Scheme on the Planet-The U.S. Government
"American Economic Exceptionalism Explained"                     USAPonzi                                      by John W. White   Mar 29, 2013

USAPonzi Long Term Projection
$98.6 Quadrillion Created out of "Thin Air"
Aug 21, 2014

The very nature of a Ponzi scheme means that there has to be an ever increasing amount of money injected into the scheme to sustain the promised returns to the investors.  USAPonzi is an extreme example of such a scheme with now $97 Trillion already paid to previous and current U.S. Citizens and U.S. Businesses (the early investors), in the form of unpaid taxes, with this liability passed forward to future investors.  In the case of USAPonzi, the payments to the early investors look like current period money since the current taxpayers do not have to pay taxes to finance the future social benefits payments and the future beneficiaries can make current period financial commitments and decisions based on the Government promises to pay these future social benefits.  This is what creates the economic stimulus of our deficit spending even though the tax revenues are not collected to pay these social benefits.   So with USAPonzi, the Ponzi operator does not even have to come up with the money to perpetrate the Ponzi scheme, the operator just says trust me, I will pay it when the time comes even though there no financial assets backing that promise. 

Because of the deficit spending by the U.S. Government that our current fiscal policy creates, our Federal Debt has continued to increase every year since FY1969.  But the bigger problem is that the future financial obligations are much larger than the current accounting system reports.  The current system (Cash Accounting) only indicates the magnitude of the cash debt (our Federal Debt of $17.7 Trillion as of Aug 1, 2014) that the government has incurred.  Proper GAAP Accounting indicates the magnitude of the total promises that the U.S. Government has already made to the holders of the Federal Debt and the social benefit commitments that have been made to U.S. Citizens; that being our GAAP Obligation of $97 Trillion (as of Aug 1, 2014).


Current fiscal policy means that our Federal Debt is continuing to increase since we have a Cash Deficit in FY2014 of $514 Billion.   Our debt will actually go up by more than this deficit indicates since the U.S. Government is "borrowing" and spending the excess social benefit tax revenues collected in FY2014 and the U.S.Government must also pay the interest on the previously "borrowed" social benefit tax revenue.  Our Federal Debt will continue to increase until this Cash Deficit spending is terminated.

My USAPonzi Fiscal Model projects that our Federal Debt will increase by $868 Billion in FY2014 even though the U.S. Government claims a Cash Deficit of "only" $514 Billion.  The USAPonzi Fiscal Model projects that our Federal Debt will be $17.606 Trillion by the end of FY2014 (Sept 30, 2014) but "Debt to the Penny" already puts our Federal Debt at $17.692 Trillion as of August 19, 2014 so my estimate of the FY2014 year end Federal Debt looks like it will low. (see Debt/Deficit Discrepancy for further explaination)

The bigger problem is that our GAAP Obligation is continuing to increase since we have a GAAP Deficit in FY2014 of $6.4 Trillion.  Our GAAP Obligation will continue to increase until this GAAP Deficit spending is terminated. 

The even bigger problem is that both our Cash Deficit and GAAP Deficit are influenced by the interest expense on our Federal Debt and on our GAAP Obligation hence there is a compounding effect that causes both the GAAP Deficit and the GAAP Obligation to increase exponentially.

Until our U.S. Government stops this Cash Deficit spending of $514 Billion a year AND more importantly stops the GAAP Deficit spending of $6.4 Trillion a year our Debt and our Obligation will continue to spiral out of control.

However because the U.S. Government refuses to take the difficult actions that are required to resolve this critical fiscal problem and extinguishes USAPonzi, the financial condition of The United States of America will continue to deteriorate.  This will lead to unlimited printing of dollars to meet the spending requirements authorized by current fiscal policy.  (see Hyperinflation/Austerity)

Even after the U.S. Government reduces our GAAP Deficit to ZERO, we will still have a massive GAAP Obligation that is already $97 Trillion and increasing exponentially and at a rate of $6.4 Trillion in FY2014.

USAPonzi Fiscal Model Long Term Projection

I have created a long term projection that demonstrates just how outrageous the current fiscal policy is and where our Debt, Deficit, and Obligation are headed unless the U.S. Government takes serious action to constrain current overspending, overcommitting, and undertaxing.

This long term projection assumes that the recent trends of Government spending, committing, and taxing would continue throughout the next 136 years.  136 years seems like a long time, and it is, but you have to realize that the U.S. Government has already been operating with corrupt and fraudulent accounting for 46 years.  This projection assumes that the GDP growth rate will be 2.5% per year which is the CBO projection of our GDP growth rate for the next decade and also assumes that tax revenues would continue at the current level of 17.6% of GDP.   Obviously different assumptions will lead to outcomes that could differ radically from this projection.  This exercise is only meant to demonstrate the magnitude of the long term financial problems that are being created by current fiscal policy.

The details of this projection can be found in this spreadsheet:  USAPonzi Long Term Projection.

Its not going to get better!  Until it stops getting worse!

The following table shows selected key parameters from this USAPonzi Long Term Projection.

Year                       1969        2014         2015         2020           2050           2100           2150
GDP                      .945T       17.0T        17.4T        19.7T            41T           142T           489T
Cash Deficit      -.0032T       .514T        .817T      1.292T          12.4T          239T        3,473T   

Debt                      .354T       17.6T        18.3T        24.3T          186T        4,133T      64,116T

Debt%GDP              37%      103%        105%        133%          450%       2,904%    13,108%
GAAP Deficit          N/A         6.4T         7.9T           9.1T          40.3T           440T        4,812T
Obligation               N/A         98T         105T         145T            774T       9,065T       98,592T
Obligation%GDP     N/A
       577%        600%        733%        1,869%      6,370%      20,156%
    $10.00      $1.00        $.095         $0.74          $0.16        $0.012       $0.0009
ObligationXDollar   N/A         98T         101T         106T           122T           110T             92T

Table 1:  USAPonzi Long Term Projection
Obligation=Debt+Unfunded Liabilities

The following are some observations that one can make from Table 1 (above) and the USAPonzi Long Term Projection spreadsheet:

The value of the U.S. Dollar will converge to ZERO, at the current rate of 5% per year, if this Deficit Spending continues as programmed by current fiscal policy! 

Our Obligation in FY2020 would be $145 Trillion and in FY2150 would be $98.6 Quadrillion!

U.S. Citizens and Businesses would appear to be quite wealthy by FY2150 as they would have avoided paying $98.6 Quadrillion in taxes!

U.S. Citizens and Businesses would only appear to be quite wealthy in FY2150 based on this $98.6 Quadrillion of tax avoidance because it would not be materially different than the $98 Trillion in FY2014 due the devaluation of the Dollar.  This is shown in this Table, inflation adjusted, by the ObligationXDollar line.  The U.S. Government is, via USAPonzi, putting new money (Phantom Money) into the U.S. and global economy at the rate of nominally 5% percent per year and the value of the dollar is going down at nominally the same rate. (see Rich get Richer/Poor get Poorer)

Our Obligation as a percent of GDP in FY2020 would be 733% and in FY2150 would be 20,156% of GDP!

Our Debt in FY2050 would be $186 Trillion and in FY2150 would be $64.1 Quadrillion!

Our Debt as a percent of GDP in FY2020 would be 133% and in FY2150 would be 13,108% of GDP!  Some economists think this becomes a problem when this ratio exceeds 100% and of course we were already above that threshold by FY2012.

Our Debt tends to converge to the same level as our Obligation, but that should be no surprise since our Obligation is the sum of our Debt and our Unfunded Liabilities and as those future liabilities  become promises that are due to be paid, they must be converted to Debt.

Our GAAP Deficit spending would exceed our GDP in FY2052!

Our Cash Deficit spending would exceed our GDP in FY2087!

The U.S. Treasury concurs with this analysis that our Federal Debt will spiral out of control with current fiscal policy.  However the USAPonzi projection predicts that the Federal Debt will get to 400% of GDP by 2048 and the Treasury projects that this level will not hit until 2087. (see The Treasury Assessment)

U.S. Government; you have a problem!!!!!  

Next Page: Greed Trumps Fear!